Deciding whether or not to launch a smaller iPad isn't the only choice Apple faces. How should it price a smaller tablet, especially when you can pick up a Kindle Fire for $159 or a Nexus 7 for $199? Remember that the entry-level 16GB iPod touch costs $199 already. Apple has never felt obligated to compete directly on price--until the release of the original iPad, which shocked many with its $500 entry price. To price a smaller iPad competitively, Apple may need to limit its features, storage space, or processor speed.

Apple's position in the music industry is assured at this point: The company has sold billions of songs since opening the iTunes Store in 2003, and its iPods have dominated the music-player market for more than a decade now. But the next battleground is the living room.

The company has been trying to come up with a compelling product for that part of the house for years, without much success. In fall 2006, Jobs previewed the first version of the Apple TV--then code-named iTV--which went on to launch in spring 2007. Since then, the Apple TV has been updated several times, most notably in fall 2010, when it became  that focused on streaming media and connection with the rest of Apple's ecosystem.

Both Jobs and his successor Tim Cook have said that the Apple TV is still a "hobby"--in other words, not as crucial to the company's success as iOS devices or the Mac. But that hobby is still surprisingly serious: In July, Cook said that the device this fiscal year, and that the company is committed to continuing "to pull the string to see where it takes us."